REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT dated as of February 16, 1999, by and among
Intelligroup, Inc., a New Jersey corporation (the "Company"), and Xxxxxxx X.
Xxxxxxxxx and Xxxx X. Xxxxxxx, who constitute all of the shareholders (the
"Shareholders") of Empower, Inc., a Michigan corporation ("Empower Inc."), and
Xxxxxxx X. Xxxxx and Xxx X. Xxxxxx (who, along with the Shareholders, constitute
all of the members (the "Members") of Empower Solutions, L.L.C., a Michigan
limited liability company ("Empower LLC")).
W I T N E S S E T H:
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WHEREAS, the Company, ES Merger Corp. ("Sub"), a Michigan corporation and a
wholly-owned subsidiary of the Company, the Members and Empower LLC are parties
to an Agreement and Plan of Merger dated as of February 16, 1999 (the " Empower
LLC Merger Agreement") pursuant to which Empower LLC will merge with and into
Sub (the "Empower LLC Merger");
WHEREAS, pursuant to the Empower LLC Merger, the Members are to receive
certain shares of the Company's common stock, $0.01 par value (the "Common
Stock"); and
WHEREAS, the Company, Sub, the Shareholders and Empower Inc. are parties to
an Agreement and Plan of Merger dated as of February 16, 1999 (the "Empower Inc.
Merger Agreement" and collectively with the Empower LLC Merger Agreement, the
"Merger Agreements") pursuant to which Sub will merge with and into Empower Inc.
(the "Empower Inc. Merger", and collectively with the Empower LLC Merger, the
"Mergers");
WHEREAS, pursuant to the Empower Inc. Merger, the Shareholders are to
receive certain shares of the Company's Common Stock; and
WHEREAS, the parties hereto desire to set forth their agreement concerning
the registration for resale of the Common Stock issued in connection with the
Mergers under the Securities Act of 1933, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
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following meanings:
(a) "Company" shall mean Intelligroup, Inc. and its successors and assigns.
(b) "Effective Date" shall mean the date upon which the Mergers are
consummated.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the SEC thereunder, all as the same shall be in effect
at any relevant time.
(d) "Person" means an individual, a partnership (general or limited),
corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
(e) "Registration Statement" shall mean any Registration Statement of the
Company filed with the SEC pursuant to the provisions of Section 2 of this
Agreement which covers the resale of the Restricted Stock on an appropriate form
then permitted by the SEC to be used for such registration and the sales
contemplated to be made thereby under the Securities Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
Registration Statement, including any pre-and post-effective amendments thereto,
in each case including the prospectus contained therein, all exhibits thereto
and all materials incorporated by reference therein.
(f) "Restricted Stock" shall mean the shares of Common Stock issued by the
Company in the Mergers, and any additional shares of Common Stock or other
equity securities of the Company issued or issuable after the date hereof in
respect of any such securities (or other equity securities issued in respect
thereof) by way of a stock dividend or stock split, in connection with a
combination, exchange, reorganization, recapitalization or reclassification of
Company securities, or pursuant to a merger, division, consolidation or other
similar business transaction or combination involving the Company; provided
that: as to any particular shares of restricted stock, such securities shall
cease to constitute Restricted Stock (i) when a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of thereunder, or
(ii) when and to the extent such securities are permitted to be distributed
pursuant to Rule 144 (or any successor provision to such Rule) under the
Securities Act or are otherwise freely transferable to the public without
further registration under the Securities Act.
(g) "SEC" shall mean the United States Securities and Exchange Commission.
(h) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar or successor federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at any relevant time.
(i) "Trading Day" shall mean any day on which the New York Stock Exchange
is open for trading.
Capitalized terms used in this Registration Rights Agreement and not
otherwise defined herein shall have the same meaning ascribed thereto in the
Merger Agreements.
2. Registration of Restricted Stock.
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(a) SHELF REGISTRATION. As soon as practicable after the Effective Date,
but in no event later than the announcement of the Company's 1999 first quarter
financial results, the
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Company shall use its best efforts to prepare and file a Registration Statement
with the SEC (the "First Registration Statement") registering for resale by the
Members 50% of the Restricted Stock issued to them in connection with the
Mergers, and use its best efforts to, as promptly as possible thereafter, have
such Registration Statement declared effective for the purpose of facilitating
the public resale of such Restricted Stock. If, at the time the Company is
required to file the First Registration Statement, the procedure specified in
the Merger Agreements relating to the Net Book Value Adjustment to the Merger
Consideration under each of the Merger Agreements has not yet been completed,
the Company shall use its best efforts to include in the First Registration
Statement 56% of the Restricted Stock issued to the Members at the Closing of
the Mergers. Not later than the first anniversary of the Effective Date, the
Company shall use its best efforts to prepare and file a Registration Statement
with the SEC registering for resale by the Members any shares of Restricted
Stock then held by them not then subject to an effective Registration Statement
filed pursuant to this Section 2(a) or pursuant to Section 2(b) hereof. The
Company shall use its best efforts to, as promptly as possible thereafter, have
such Registration Statement declared effective for the purpose of facilitating
the public resale of the Restricted Stock covered thereby.
(b) PIGGYBACK REGISTRATION. If at any time following the date hereof but
prior to the first anniversary of the Effective Date the Company proposes to
file a registration statement under the Securities Act (except with respect to
registration statements on Forms X-0, X-0, or any other form not available for
registering the Common Stock for sale to the public), with respect to an
offering of Common Stock for its own account or the account of another holder
thereof, then the Company shall in each case give written notice of such
proposed filing to the Members at least 30 days before the anticipated filing
date of the registration statement with respect thereto (the "Piggyback
Registration"), and shall, subject to Section 2(c) and Section 2(d) below, use
its best efforts to include in such Piggyback Registration such number of shares
of Restricted Stock then held by the Members as shall be equal to 33.33% of the
Restricted Stock not then subject to an effective Registration Statement filed
pursuant to Section 2(a).
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their reasonable opinion the
amount Restricted Stock requested to be included in such registration exceeds
the amount which can be sold in an orderly manner in such offering within a
price range acceptable to the Company, the Company shall use its best efforts to
include in such registration (i) first, the securities the Company proposes to
sell, and (ii) second, the Restricted Stock requested to be included in such
registration by the Members.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of Common Stock other
than the Restricted Stock held by the Members, and the managing underwriters
advise the Company in writing that in their reasonable opinion the amount of
Common Stock requested to be included in such registration exceeds the amount
which can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, the Company
shall use its best efforts to include in such registration (i) first, the Common
Stock requested to
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be included therein by the holders requesting such registration and the
Restricted Stock requested to be included in such registration, pro rata among
the holders of such shares, and (ii) second, other shares requested to be
included in such registration.
(e) Notwithstanding anything to the contrary contained herein, the
Company's obligation in Section 2(a) and Section 2(b) above shall extend only to
the inclusion of the Restricted Stock in a Registration Statement filed under
the Securities Act. The Company shall have no obligation to assure the terms and
conditions of distribution, to obtain a commitment from an underwriter relative
to the sale of the Restricted Stock or to otherwise assume any responsibility
for the manner, price or terms of the distribution of the Restricted Stock.
Furthermore, the Company shall not be restricted in any manner from including
within the Registration Statement the distribution, issuance or resale of any of
its or any other securities.
3. Registration Procedures. Whenever it is obligated to register any
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Restricted Stock pursuant to this Agreement, the Company shall:
(a) use its best efforts to prepare and file with the Commission a
Registration Statement with respect to the Restricted Stock in the manner set
forth at Section 2 hereof and use its best efforts to cause such Registration
Statement to become effective as promptly as possible and to remain effective
for that period identified in Section 3(g) hereafter;
(b) prepare and file with the Commission such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the period
specified in Section 3(g) below and to comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock covered
by such Registration Statement in accordance with the Shareholder's intended
method of disposition set forth in such Registration Statement for such period;
(c) furnish to the Members and to each underwriter, if any, such number of
copies of the Registration Statement and the prospectus included therein
(including each preliminary prospectus), as such persons may reasonably request
in order to facilitate the public sale or other disposition of the Restricted
Stock covered by such Registration Statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such Registration Statement under the securities or blue sky laws of
such jurisdictions as the Members, or, in the case of an underwritten public
offering, the managing underwriter shall reasonably request; provided, however,
that the Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;
(e) immediately notify the Members under such Registration Statement and
each underwriter, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a result
of which the prospectus contained in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required or necessary to be stated therein in order to make the
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statements contained therein not misleading in light of the circumstances under
which they were made;
(f) make available for inspection by the Members, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by the Members or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by the Members, underwriter, attorney,
accountant or agent in connection with such Registration Statement;
(g) for purposes of Section 3(a) and Section 3(b) above, the period of
distribution of Restricted Stock shall be deemed to extend until the earlier of:
(A) the period in which all shares of Restricted Stock covered thereby shall
have been sold; and (B) the date upon which applicable transfer restrictions
imposed under Rule 144 (or any successor provision to such Rule) have expired;
(h) if the Common Stock is listed on any securities exchange or automated
quotation system, the Company shall use its best efforts to list (with the
listing application being made at the time of the filing of such Registration
Statement or as soon thereafter as is reasonably practicable) the Restricted
Stock covered by such Registration Statement on such exchange or automated
quotation system;
(i) enter into normal and customary underwriting arrangements or an
underwriting agreement and take all other reasonable and customary actions if
the Members sell their shares of Restricted Stock pursuant to an underwriting
(however, in no event shall the Company, in connection with such underwriting,
be required to undertake any special audit of a fiscal period in which an audit
is normally not required);
(j) notify the Members if there are any amendments to the Registration
Statement, any requests by the SEC to supplement or amend the Registration
Statement, or of any threat by the SEC or state securities commission to
undertake a stop order with respect to sales under the Registration Statement;
(k) cooperate in the timely removal of any restrictive legends from the
shares of Restricted Stock in connection with the resale of such shares covered
by an effective Registration Statement; and
(l) comply with all requirements under the Securities Act, the Exchange Act
and applicable state Blue Sky laws.
4. Expenses.
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(a) For the purposes of this Section 4, the term "Registration Expenses"
shall mean: all expenses incurred by the Company in complying with Section 2 of
this Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, "blue sky" fees,
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fees of the National Association of Securities Dealers, Inc. ("NASD"), fees and
expenses of listing shares of Restricted Stock on any securities exchange or
automated quotation system on which the Company's shares are listed and fees of
transfer agents and registrars. The term "Selling Expenses" shall mean: all
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock and all accountable or non-accountable expenses paid to any
underwriter in respect of the sale of Restricted Stock.
(b) Except as otherwise provided herein, the Company will pay all
Registration Expenses in connection with the Registration Statement filed
pursuant to Section 2 of this Agreement. All Selling Expenses in connection with
any Registration Statement filed pursuant to Section 2 of this Agreement shall
be borne by the Members, or by such persons other than the Company (except to
the extent the Company may be a seller) in proportion to the number of shares of
Common Stock included under such Registration Statement, or as they may
otherwise agree.
5. Obligations of the Members.
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(a) In connection with each registration hereunder, the Members will
furnish to the Company in writing such information with respect to themselves
and the securities held by them, and the proposed distribution by them as shall
be reasonably requested by the Company in order to assure compliance with
federal and applicable state securities laws, as a condition precedent to
including such Member's Restricted Stock in the Registration Statement. Each
Member also shall agree to promptly notify the Company of any changes in such
information included in the Registration Statement or prospectus as a result of
which there is an untrue statement of material fact or an omission to state any
material fact required or necessary to be stated therein in order to make the
statements contained therein not misleading in light of the circumstances then
existing.
(b) In connection with each registration pursuant to this Agreement, each
Member selling shares will not effect sales thereof until notified by the
Company of the effectiveness of the Registration Statement, and thereafter will
suspend such sales after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update a
Registration Statement or prospectus. At the end of any period during which the
Company is obligated to keep a Registration Statement current, each Member shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold, and the
Member shall notify the Company of the number of shares registered which remain
unsold immediately upon receipt of such notice from the Company.
6. Information Blackout.
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At any time when a Registration Statement effected pursuant to Section 2
relating to Restricted Stock is effective, upon written notice from the Company
to the Members that the Company has determined in good faith that sale of
Restricted Stock pursuant to the Registration Statement would require disclosure
of non-public material information, the Members shall
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suspend sales of Restricted Stock pursuant to such Registration Statement until
such time as the Company notifies the Members that such material information has
been disclosed to the public or has ceased to be material or that sales pursuant
to such Registration Statement may otherwise be resumed. The Company will use
its best efforts to minimize the duration of any suspension of trading required
hereunder.
7. Compliance with Rule 144. The Company covenants and agrees that it will
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file all reports required to be filed by it under the Securities Act and the
Exchange Act (or, if the Company is not required to file such reports, it will,
upon the request of the Members holding Restricted Stock, make publicly
available other non-confidential information so long as necessary to permit
sales under Rule 144 under the Securities Act), and will take such other action
as the Members may reasonably request, all to the extent required from time to
time to enable the Members to sell the restricted securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC. Upon the request of a
Member holding Restricted Stock, the Company will deliver to such Member a
written statement as to whether it has complied with such requirements.
8. Miscellaneous Provisions.
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(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
(b) Counterparts. This Agreement may be signed in any number of
counterparts and delivered via facsimile, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company and the Shareholder.
(d) Notices. All communications under this Agreement shall be sufficiently
given if delivered by hand or by overnight courier or mailed by registered or
certified mail, postage prepaid, addressed,
(i) if to the Company, to:
Xx. Xxxxxx X. Xxxxxx
Chief Financial Officer
Intelligroup, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
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with a copy to:
Xxxxx X. Xxxxxx, Esquire
Xxxxxxxx Ingersoll, Professional Corporation
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
(ii) if to the Members, to the address identified on the books and
records of the Company;
with a copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Xxxx Xxxxxxx and Xxxxx, PLC
Detroit Center, Suite 2500
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
or, at such other address as any of the parties shall have furnished in writing
to the other parties hereto.
(e) Successors and Assigns; Members as Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors and assigns, and the agreements of the Company herein shall inure to
the benefit of the Members and their respective successors and assigns.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Entire Agreement; Survival; Termination. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, each of the parties has executed or caused this
Registration Rights Agreement to be executed as of the date first above written.
INTELLIGROUP, INC.
By:/s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
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